recovering disruption losses caused by third parties
DESCRIPTION
How to minimise airline losses generated by aircraft damaged on groundTRANSCRIPT
Total global estimates put
at They more
than doubled over the past ten years.
Aircraft damage incidents cause longest and most costly disruptions to individual airlines.
$4b
$10b
2003 2013
(Flight Safety Foundation)
2023
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of damaged aircraft that includes disruption costs is usually
, and in some cases much more.
(Flight Safety Foundation)
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An increasingly busy operational environment and growing number of make airlines more and more susceptible to rise in hidden costs of disruptions, jeopardising their already thin profit margins.
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This can incur to
airlines
ripple effects of disruptions.
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So, who is paying
the bill? Airlines Ground Service
Providers
Carriers have been asked to provide quantifiableevidence of their damages and they have found it difficult if not impossible.
ASA-Airport Service Association
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Years-long attempts across the industry to create a recognised disruption costing model have failed because
to identify and measure the true costs of disrupted operation.
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At the lies the to cost management manifested through
which are multidimensional by nature, and their
like flight delays, cancellations, diversions, additional flights, and aircraft replacements.
'What stops airlines from recovering uninsured disruption losses caused by third parties'
Click on the screen to read my blog article
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The same applies to missing information about 'direct'
, including additional handling, loss of revenue and passenger compensation, which
.
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Another obstacle
to identifying full
impact of
damages caused
by third parties is
related to
.
It is based in parts
of an organisation
necessary to
successfully complete this complex task
(job usually delegated to Engineering,
Insurance, Ground Operations, Flight
Safety or some other departments).
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That's why are
for use in loss recovery or decisions related to investment in incident prevention.
A
B
C
DISRUPTION LOSS ESTIMATES
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Improvement is possible even for the most complex organisations. This could be achieved by following the principles of Event-Based Management.
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The next step is to provide relevant departmental cost information by cutting through information and organisational boundaries.
Event needs to be observed as close to real time as possible to be able to identify the true costs and causes of disruptions.
All it takes then is to create a system that provides links between these costs, initial and reactionary schedule changes, and their root causes.
In addition, numbers have to be accompanied with stories of those directly and indirectly involved in events, so that otherwise invisible interconnections and dependencies could be fully understood.
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Designing and implementing this relatively simple and inexpensive method for loss recovery requires a good system knowledge, support at highest organisational level, and cross-system cooperation
and ensures that
.
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The results spread for
the purpose of , with
.
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This example shows the benefits of Event-Based Costing used for recovery of disruption losses caused by aircraft damaged on ground.
Example from 'Managing Costs We Don't Understand'
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THE INCIDENT
The fuselage of a B747 was damaged by a catering truck at an outstation on a long-haul route.
The aircraft was temporarily repaired and ferried back to home base where it remained out of service for 5 days.
AIRCRAFT OUT OF SERVICE
DISRUPTED PASSENGERS
Full effects of 5 days’ long passenger disruptions included in calculation
EXAMPLE 2 – Part 1
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After thorough analysis based on principles of Event Based Costing, the full cost impact of knock-on effects came to
in losses caused by the third party, ready to support claims for loss recovery.
INDIRECT COSTS OF AIRCRAFT DAMAGE
Disruption Diagnostics
INDIRECT COSTS OF AIRCRAFT DAMAGE
Airline estimate
The value of indirect losses was estimated at based on the average, generic values normally used to perform the loss-of-aircraft-use analysis. (The airline spent
on direct cost of aircraft repair).
EXAMPLE 2 – Part 2
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We apply principles of Event Based Costing to provide
related to aircraft damage, essential for successful recovery of losses from third parties.
WELCOME
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We also to
to support the process of loss recovery and minimise legal costs.
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Jasenka RapajicAstute Aviation
To find out more on how we can help you recover losses caused by third parties,
http://uk.linkedin.com/in/jasenkarapajic
http://beyonddisruptions.blogspot.co.uk/
www.astuteaviation.com
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